In the light of the news about ASIC conducting a detailed enquiry into CommInsure regarding irregularities of payments to several terminally ill customers and loose definitions of conditions of release around critical illness, it is important to probe and assess how these circumstances could impact our personal situation.
Insurance benefits, whether it’s Life, Total Permanent Disability, Trauma or Income Protection generally can be a substantial part of any payout towards one Estate Planning strategy for their surviving loved ones.
Most investors that buy insurances through their superannuation or outside need to ascertain their risk mitigation strategies, on an ongoing basis. The focus should not only be on the right amount of life, disability and income protection insurance but should also be on ensuring that the claims will be tenable and actually paid in the right amount, to the right person and at the right time.
The challenges could be many. Whether it relates to:
1. Valid nominations that are reviewed on an ongoing basis
2. Tax implication of benefit payouts
3. Testamentary wishes of the insurer executed through proper documentation
4. Trustee succession planning mainly for SMSF, (remember Binding Death Benefit Nomination can be challenged)
5. Evaluate Death Benefit payout whether a pension stream or lump sum is the better option
6. Liquidity and Debt risks for ongoing SMSF, on death benefit payouts
7. Increasing or decreasing insurances within or outside superannuation based on changing circumstances
8. Impact of Regulation 4.07D became effective from July 2014 and may prohibit certain death benefit payments in Super and there could be many other potential challenges depending on your personal situation.
Within superannuation and in particular SMSF, there are important requirements for compliances in relation to Life Insurance. Breach of the compliance requirements can result in severe penalties to the Trustees. This calls for a proper Trustee Action Plan and Trustee Documentation structure.
Insurance Review is an integral part of any Risk Mitigation strategy that can make all the difference and it can ensure that when payouts are triggered, they are made appropriately, to your dear and near ones.
Book your consultation session with us today and let us show you how we can ensure your Risk Mitigation strategy is right for you.
Published by Vic Singh, Senior Financial Advisor , BLUEZONE FINANCIAL
Vic is a Chartered Accountant and Financial Planning Specialist who has worked with leading Financial Services Companies in areas of wealth creation, tax planning, superannuation and retirement planning over the last 10 years. He has also held senior positions of finance and strategic planning in major multinational organizations.
After stepping back from his senior corporate roles, he is now living his passion of educating and advising clients on achieving their financial and retirement goals.
*The above information should not be taken as constituting professional advice from BlueZone Financial. Any information that is presented is for educational purposes. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
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